Lottery outsourcing attracts only one bidder, Treasury says

Only one bidder submitted a proposal to take over the sales and marketing operations of the New Jersey Lottery: Northstar New Jersey, a joint venture that includes GTECH Corp., which for nearly 30 years has supplied lottery technology to New Jersey.

Northstar's other partners are Scientific Games Corp., of New York, a global lottery provider; and Toronto-based OSE LTT NJ Holdings Inc., a subsidiary of OMERS Administration Corp., an affiliate of the Ontario Municipal Employees Retirement System — one of the largest pension funds in Canada.

If Northstar is chosen, following a review process expected to take two to three months, it has to make a $120 million upfront payment to the lottery, and enter into a pay-for-performance contact that allows Northstar to earn incentive payments if it increases the lottery's net revenues, after expenses and prizes.

Bill Quinn, a spokesman for Treasury, which runs the Lottery, said, "We will analyze the bid very closely to make a determination as to whether it is in the best interests of the state of New Jersey."

Quinn confirmed only one bid had arrived by the Thursday afternoon deadline; when the RFP process started earlier this year, several other major international lottery vendors had indicated they were mulling New Jersey's outsourcing deal. Quinn said details of the proposal would not be made public until it becomes a contract that the state agrees to with the vendor.

Quinn said the Northstar bid will be analyzed by a review committee to make sure it meets all the requirements of the bid. For example, the bidder must have experience running a public lottery with annual revenues of $1 billion or more; have the financial capability to make the required "accelerated guaranty payment" of $120 million; and must also meet a series of other reviews, such as on the qualifications of personnel, its past record of success in completing contracts and the net income targets it has proposed.

If the bid meets all of those standards, it will be considered qualified, and the Treasury's Division of Purchase and Property will enter into negotiations with the bidder to obtain its "best and final offer" and to make a recommendation on whether the state should enter into a contract with the bidder, Quinn said.

Bob Vincent, senior vice president of corporate affairs for GTECH, a Lottomatica subsidiary that provides lottery services in 27 states, declined to comment on the Northstar bid.

"This is a process, we are just beginning the process, and we look forward to continued negotiations with the state," he said.

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Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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